Easy Purchase: Top Warren Buffett Stock to Invest in Immediately
I've got to confess, I struggle to comprehend a lot of Warren Buffett's investment choices. His company, Berkshire Hathaway, has significant stakes in financial giants like American Express and Bank of America. I mean, the 2008 subprime mortgage meltdown taught me a thing or two about the banking sector – it's not exactly my preferred investing ground.
Then there's Berkshire's massive positions in oil and energy titans like Chevron and Occidental Petroleum. While I understand Buffett's reasoning, the shift towards renewable energy seems inevitable. I'd feel more comfortable investing in energy companies that are actively embracing this transition.
But when Warren Buffett's picks make sense, man, do they make sense. And I believe one of Berkshire Hathaway's largest holdings is a terrific buy right now, despite what you might think. Don't get me wrong, I get why Buffett and Berkshire might not be purchasing more shares of Coca-Cola (KO 1.87%) at this time. But for new investors looking to start their portfolio in 2025, this could be a no-brainer.
Coca-Cola's Sweet Valuation
At first glance, Coca-Cola's valuation might seem less than appealing. Its P/E ratio is 28.5, and on a cash profit basis, it's trading at a remarkable 63.6 times free cash flows. But let's not just dismiss this stock based on these figures.
Over the past year, Coca-Cola's stock has underperformed the S&P 500 market index, but it has outperformed in 2025. And you know what, Warren Buffett isn't exactly shouting about this stock right now. Berkshire is buying Occidental Petroleum and selling Apple stock while holding onto its Coca-Cola holdings for years now. So, they're not selling either. Instead, they're content with receiving hefty dividend payouts from their Coca-Cola stake.
Coca-Cola's Lucrative Dividends
Now we're starting to see why Coca-Cola is a smart buy, yes?
Coca-Cola is the epitome of a great dividend stock. This steady income generator is exactly what you want in your portfolio for those golden years. And the sooner you set up your dividend generating position, the better.
Buffett established Berkshire's Coca-Cola position back in 1988 and 1989 at a split-adjusted $1.37 per share. That equated to a reasonable 2.7% yield in early 1989.
Fast-forward to today, and Coca-Cola pays quarterly dividends of $0.485 per share. That's $1.94 per share, per year – a whopping 42% more than Berkshire's initial purchase price. All it took was setting up a substantial Coca-Cola position and being patient, allowing dividends and compounding to work their magic over approximately 35 years.
Coca-Cola's Dividends: The Gift That Keeps Giving
Coca-Cola's commitment to generating cash profits and funneling most of that surplus cash into dividend payouts is outstanding. While past performance doesn't guarantee future results, I believe Coca-Cola will continue doing the same thing for decades to come.
So, if you're interested in starting a future income-generating Coca-Cola position, you're not doing it on the same scale as Warren Buffett, but you're using the same wealth-building tools. Long-term investment, dividend increases, and patiently watching your investment grow over time are all essential to building wealth. And Coca-Cola delivers all of these essential qualities in 2025. I can't wait to see that excellent dividend yield grow over the next few decades.
- Despite Buffett's focus on oil and energy companies like Occidental Petroleum, some investors might find more appeal in other dividend-generating stocks, such as Coca-Cola, which offers a substantial yield.
- As Buffett has held onto his Coca-Cola stake for years, new investors looking to start their portfolio in 2025 might find a no-brainer in this reliable dividend stock.
- Occasionally, investing in stocks like Coca-Cola can prove to be a funnel for long-term wealth accumulation, given its consistent dividend payouts and growth.
- By 2025, if an investor sets up a substantial position in Coca-Cola and remains patient, they can expect to benefit from the company's solid dividend payouts and compounding growth.
